Govt's Rice-Pledging Scheme Taking A Toll On Thailand's Budget

[webfact]

LOSS
Rice-pledging scheme taking a toll on budget
Suphannee Pootisut
The Nation

Funds from fiscal 2014-16 may need to be appropriated to cover Bt100-bn loss

BANGKOK: -- The government's rice-pledging scheme is taking a toll on Thailand's tightly squeezed budget, as some of the funds from fiscal years 2014-16 might be required to offset the Bt100-billion loss.

The subcommittee given the task of concluding the rice-pledging scheme submitted a proposal yesterday along with some recommendations to prevent further losses from the scheme, a source who chose to remain anonymous, said.

The proposal comes at a time when the Bank for Agriculture and Agricultural Cooperatives (BAAC) is seeking more funds to continue with the scheme and stockpiles are rising amid falling rice prices in the global market. Economists, including Prime Minister Yingluck Shinawatra's adviser Virabongsa Ramangkura and the Thailand Development Research Institute's Ammar Siamwalla, have warned the government of the unsustainability of this allegedly graft-ridden project and its burden on the country's budget. The World Bank had earlier estimated that in the first year, the scheme would cost the country Bt115 billion out of its budget of Bt376 billion.

According to the source, the Bt100 billion would be used to repay most of the Bt117.796 billion borrowed to finance the pledging of rice in the 2011-2012 production year.

The loans' accumulated interest has reached Bt6.82 billion.

"With some money from the annual expenditures allocated for the debt repayment, the Bt100-billion loan would be written off. If buyers for the stockpiled rice can be found, the proceeds will be used to repay the remaining principal," the source said.

Assuming the losses in the budget balance sheet would mean the government would have less funds to spend on necessary projects. For fiscal 2014, the Cabinet had recently approved Bt2.5 trillion expenditure against Bt2.27 trillion in revenue, resulting in a deficit of Bt250 billion. Under the subcommittee's proposal for the government to repay Bt63 billion of the loans taken for rice in the fiscal year, the budget deficit is bound to increase or the government will have to cut expenditure on other projects by a similar sum.

Proposal before cabinet

The proposal from the subcommittee, chaired by Finance Ministry deputy permanent secretary Supa Piyajitti, is yet to win the Cabinet approval.

The pledging scheme for in-season rice in 2011-12 production saw the total principal at Bt117.796 billion with interest rising to Bt6.82 billion.

The first tranche of payment in fiscal 2014 will be Bt58.90 billion towards the principal and Bt4.01 billion towards interest. The second tranche (fiscal 2015) will consist of Bt35.34 billion for the principal and Bt2.01 billion interest. The third (fiscal 2016) will consist of Bt23.56 billion principal and Bt802.43 million interest.

After five subcommittee meetings, additional measures were proposed to ensure more efficiency in agriculture product-pledging schemes and to prevent risks that may arise.

Some measures include an official registration of farmers for actual plantation areas and production, a survey of at least 20 per cent of all actual farming areas that are registered and stringent controls on rice milling and rice delivery.

The source said that of the total approved borrowings amounting to Bt269.16 billion for agricultural product-pledging schemes in the 2011-12 production period, the government had borrowed Bt215.75 billion during fiscal 2012.

The government has also set plans for borrowing Bt53.41 million to cover the second crop of rice, which began to hit the market early this year.

Of the total planned borrowings, about Bt49.57 million have already been utilised. In the 2012-13 production period, the government has made plans to borrow Bt140.84 billion in fiscal 2013.


-- The Nation 2013-03-06

[Robby nz]

Some measures include an official registration of farmers for actual plantation areas and production, a survey of at least 20 per cent of all actual farming areas that are registered and stringent controls on rice milling and rice delivery.

All very big and confusing numbers wonder how the non economists in the cabinet will get on understanding that lot.

And little mention of the 2013 crop costs.

So they are recommending that checks be made on the farmers.

But is that where the corruption is, like where the money is disappearing?

[Locationthailand]

Never ceases to amaze me how this entire project is still on the books. Sell off the stored rice for whatever they can get, get back in the market as the premiere supplier 9if it's not already too late) and write it off as another bad idea at the hands for Thaksin and his dumb-ass populist BS policies. If it continues there will be no end to the suffering of debt against Thai people. Insane...

[dcutman]

Rice-pledging scheme taking a toll on budget

It is also taking a toll on State Owned Banks. Article in the other paper, is saying the BAAC is in a bit of trouble and looking for help from the Government Savings Bank.

It will be only a matter of time before Krung Thai Bank will get rapped up in this scam. It is also a matter of time when depositors are going to make a run on all state owned banks, its already happening with IBank and SME bank, and put their money in private banks.

[Nickymaster]

What a mess PT has created. All because of 1 family's desperate attempt to stay in control of this country..

Thailand Rice Mortgage Will Shrink Rice Business in Future, Says Exporter

http://oryza.com/content/thailand-rice-mortgage-will-shrink-rice-business-future-says-exporter

Thailand Rice Mortgage Program Violates WTO Rules, Alleges U.S.

http://oryza.com/content/thailand-rice-mortgage-program-violates-wto-rules-alleges-us-0

Thailand Rice Sellers Try to Tug Prices Higher But to No Avail

http://oryza.com/content/oryza-rice-recap-thailand-rice-sellers-try-tug-prices-higher-no-avail

Thailand Likely to Lose-Out as Asia Rice Exporters Vie for Share in China Rice Market in 2013

http://oryza.com/content/thailand-likely-lose-out-asia-rice-exporters-vie-share-china-rice-market-2013

[Nickymaster]

Funds from fiscal 2014-16 may need to be appropriated to cover Bt100-bn loss

Assuming it can be sold at a certain price and nothing is rotten. They keep on manipulating figures. PT seems to be spreading out the loss over few years. I bet you that they will lose much more than 100 billion in 4 years.

Only on handling and storage charge they are spending 50 billion a year which can never be recuperated.

But the big question remains: Is the rice business destroyed to such an extent that they have to keep this scam going forever??? I don't see this mess getting back to normal again.

Then again, as long as PT is around, they probably have to maintain this scam or they won't be around. It seems to be their life-line....

[siampolee]

So they want to check the farmers eh.

Well it isn't the farmer who is getting the benefits it's the middleman and an assorted bunch of corrupt politicians and favoured families both in Thailand and abroad who are lining their pockets at the expense of the farmers in the country.

Ultimately those aforementioned bunch of self serving creatures are plunging the people of Thailand into debt bondage, nothing more nothing less.

State banks are already feeling the pinch and it isn't going to be too long before the private banks feel the pinch either.

All this so as the current maladministration and one family headed by one exiled convicted bail jumper and his brown nosing acolytes can wreak damage upon Thailand to satisfy his and their lust for revenge and also his and their whims for money and ultimate power no matter what the cost may be.

The very idea of spending the hypothetical budgeted income from taxation etc for the next three years is indeed a frightening scenario, it clearly indicates where the country's economy is going to go in the not to distant future.

Get ready folks a white knuckle financial roller coaster ride is soon to start.

Edited March 6, 2013 by siampolee

[waza]

What a load of scare mongering journalism, the people releasing this information are fake reds. I have it on excellent athority from a proven economic guru that,

(February 17, 2013 1:00 am), "Thaksin Shinawatra has claimed the Yingluck government's rice pledging scheme will reap economic gains three times its costs in a matter of a few years".

Anyone want to buy some fragrant rice, fragrance of toe jam..........

Edited March 6, 2013 by waza

[rubl]

Interesting. Didn't the Minstry of Commerce just tell us they wanted to borrow a triffling THB 320 billion more for the rice mountain? Didn't they also say to have 'earned' THB 180 billion in G2G deals (details coming real soon now)?

Further more the article tells about the way a small loss of THB 100 or so billion over 2011-2012 will be repaid in a few years. Any idea already how much will be needed to repay over the 2012-2013 period? Any figures on the level of the rice mountain and whether we can already try to register it with the GBR?

[belg]

hey, check bloomberg... the rest of the world is growing so much rice the price will decline ... so, government bet again, and lost and will lose much more, while the "premium" rice is rotting in storage

[billd766]

What a wonderful Minister of Finance Thailand has in K Kittirat.

A man with his finger on the pulse a full 3 years before the 2016 budget.

[zig]

Indeed, the announced and published numbers get more confusing by day. From various recently published articles one could gather that in the first year the government has purchased 7 or 9 million tons of rice and has spent THB 376-400 billion on the entire operation, and are planning to approve THB 320 billion for another 8 or 9 or 11 million tons in the coming season. It also looks that on the entire operation the government is actually spending about three times more than the announced price of 15,000 THB per ton.

Interesting. Didn't the Minstry of Commerce just tell us they wanted to borrow a triffling THB 320 billion more for the rice mountain? Didn't they also say to have 'earned' THB 180 billion in G2G deals (details coming real soon now)?

Further more the article tells about the way a small loss of THB 100 or so billion over 2011-2012 will be repaid in a few years. Any idea already how much will be needed to repay over the 2012-2013 period? Any figures on the level of the rice mountain and whether we can already try to register it with the GBR?

[Pimay1]

hey, check bloomberg... the rest of the world is growing so much rice the price will decline ... so, government bet again, and lost and will lose much more, while the "premium" rice is rotting in storage

We don't need no stinking Bloomberg, we have K Kittirat.

[bigbamboo]

So it looks like they'll have to dip into next year's pot already to pay for this debacle.

Another reason why PTP and it's nominee candidate may have proved less than popular with actual tax payting voters in BKK.

[ballpoint]

hey, check bloomberg... the rest of the world is growing so much rice the price will decline ... so, government bet again, and lost and will lose much more, while the "premium" rice is rotting in storage

We don't need no stinking Bloomberg, we have K Kittirat.

Who needs Bloomberg when we have our very own riceberg, and the good ship Thaitanic sails at full steam towards it.

[Pimay1]

So it looks like they'll have to dip into next year's pot already to pay for this debacle.

Another reason why PTP and it's nominee candidate may have proved less than popular with actual tax payting voters in BKK.

When the government provided services have to be cut back due to no money to pay salaries of employees with resulting layoffs, then and only then I think is when the people will wake up to this government of scams.

[OzMick]

So it looks like they'll have to dip into next year's pot already to pay for this debacle.

Another reason why PTP and it's nominee candidate may have proved less than popular with actual tax payting voters in BKK.

When the government provided services have to be cut back due to no money to pay salaries of employees with resulting layoffs, then and only then I think is when the people will wake up to this government of scams.

Many Thais, and our own geo, are prepared to ignore the services that could have been provided with the lost billions, because they get their meagre cut.

[AleG]

Indeed, the announced and published numbers get more confusing by day. From various recently published articles one could gather that in the first year the government has purchased 7 or 9 million tons of rice and has spent THB 376-400 billion on the entire operation, and are planning to approve THB 320 billion for another 8 or 9 or 11 million tons in the coming season. It also looks that on the entire operation the government is actually spending about three times more than the announced price of 15,000 THB per ton.

Interesting. Didn't the Minstry of Commerce just tell us they wanted to borrow a triffling THB 320 billion more for the rice mountain? Didn't they also say to have 'earned' THB 180 billion in G2G deals (details coming real soon now)?

Further more the article tells about the way a small loss of THB 100 or so billion over 2011-2012 will be repaid in a few years. Any idea already how much will be needed to repay over the 2012-2013 period? Any figures on the level of the rice mountain and whether we can already try to register it with the GBR?

320.000.000.000 / 11.000.000 = 29.090 Baht per ton of rice in the scheme, assuming the best case scenario. The highest price paid by the scheme is 20.000 for the top quality Hom Mali, the rest gets 15.000.

A WAG would be 1/3rd to 1/4th of that money doesn't seem to go to buying the rice (let alone actually reaching the Poor Farmer TM)

[Moruya]

Sooner or later the empty vessel PTP will be so weighted down with debt it will float like a solid lead supertanker.

Can they keep the meagre farmers' subsidy going until the next election? Me thinks not.

Don't panic, don't panic? More like "we're doomed"

[ratcatcher]

I found this little story from 12 years ago. Nothing new here then.

THAILAND: Rice scam uncovered, government investigation criticised

http://www.just-food.com/news/rice-scam-uncovered-government-investigation-criticised_id93184.aspx

[waza]

I found this little story from 12 years ago. Nothing new here then.

THAILAND: Rice scam uncovered, government investigation criticised

http://www.just-food.com/news/rice-scam-uncovered-government-investigation-criticised_id93184.aspx

Ah Thaksin ver 1.0, the more things change the more they stay the same.

[Yo Sup]

Imagine if you are a wealthy person, and therefore powerful in a developing nation, and you took large sums money out of the country at a favorable exchange, and then waited for the economy to drop.... You'd make a fortune.

[vijer]

Don't worry, the PTP will soon start claiming that ronald ragans piss down theory really works and that all the money going into the pockets of the rich will get pissed on to the people and creat a flood of investments and jobs.

[rubl]

And while everybody and his dog was watching the 2.2 trillion Baht fun, we also had:

Thailand Live Sunday 31st of March #31
Cabinet approves Bt105 bln for rice-pledging scheme for off-season rice, endorses Bt622 mln in development projects for 5 central provinces /MCOT

[Thai at Heart]

The only way this can work is if there is a two year drought to squeeze output.

Or two years of gargantuan floods to ruin the crops.

[Soutpeel]

Dont know why everyone is so worried about this, you must trust the goverment

the membership fees for the new Thai Elite card part deux will offset all these loses, their business plan indicates they can recruit 100 million new members at the very reasonable price of THB 10m per card

one of the new "elite" benefits of the new TE program is that you get 3 ton of premium Thai rice for free (slightly spoiled)..

[Stradavarius37]

Once Thaksin gets the charter change forced through to allow him back in the country - this rice program will disappear faster than a fart in the wind...

[kimamey]

I found this little story from 12 years ago. Nothing new here then.

THAILAND: Rice scam uncovered, government investigation criticised

http://www.just-food.com/news/rice-scam-uncovered-government-investigation-criticised_id93184.aspx

Ah Thaksin ver 1.0, the more things change the more they stay the same.

This was a Democrat scheme though. I wonder what the outcome of it was?

If it's the millers who are gaining now, which party do they support?

[apetley]

I found this little story from 12 years ago. Nothing new here then.

THAILAND: Rice scam uncovered, government investigation criticised

http://www.just-food.com/news/rice-scam-uncovered-government-investigation-criticised_id93184.aspx

Ah Thaksin ver 1.0, the more things change the more they stay the same.

This was a Democrat scheme though. I wonder what the outcome of it was?

If it's the millers who are gaining now, which party do they support?

The Democrat rice subsidy, although less than that of PT was paid directly to the farmer so there was far less scope for corruption.

One can only wonder why PT chose not to implement a similar one.